Announcement PDF PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 CORPORATE DIRECTORY Directors William Witham Non-Executive Chairman Appointed on 3 November 2021 Maurice (Nic) Matich Managing Director Appointed on 20 October 2022 Stephen Ross Non-executive Director Appointed on 3 November 2021 Lincoln Liu Non-executive Director Appointed on 3 December 2021 Robert Hodby Executive Director Resigned on 20 October 2022 Company Secretary Jay Stephenson (appointed on 3 November 2021) Head Office and Registered Office Securities Exchange Registered Office and Principal Place of Business Australian Securities Exchange (‘ASX’) L1/389 Oxford Street Level 40, Central Park, 152-158 St Georges Terrace Mount Hawthorn WA 6016 PERTH WA 6000 Telephone +61 8 9426 0666 Telephone: 131 ASX (131 279) (within Australia) Telephone: +61 2 9338 0000 Facsimile: +61 2 9227 0885 Share Registry Website: www.asx.com.au Automic ASX Code: PIM Level 5, 191 St Georges Terrace PERTH WA 6000 Telephone +61 2 9698 7164 Auditor Hall Chadwick Audit (WA) Pty Ltd 283 Rokeby Road Subiaco WA 6008 Page | 1 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 ANNUAL REPORT 30 JUNE 2023 CONTENTS CHAIRMAN'S LETTER ………………………………………………………..…………………………………………………….3 REVIEW OF OPERATIONS - OVERVIEW…………………………………………………………………………..…..…………4 DIRECTORS’ REPORT…………………………………………………………………………………….………………………..12 REMUNERATION REPORT………………………………………………………………………………………………………...14 AUDITORS INDEPENDENCE DECLARATION…………………………………………………………………………………..20 CORPORATE GOVERNANCE STATEMENT………………………………………………………………………………….....21 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME…………….……….29 CONSOLIDATED STATEMENT OF FINANCIAL POSITION…………………………………………………………………...30 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY………………………………………………………….………...31 CONSOLIDATED STATEMENT OF CASH FLOWS……………………………………………………………………………..32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS……………………………………………………………….33 DIRECTORS’ DECLARATION……………………………………………………………………………………………………...56 INDEPENDENT AUDITOR'S REPORT……………………………………………………………………………………….…....57 ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES…………………………………………………….…..… 61 Page | 2 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 CHAIRMAN'S LETTER Dear Fellow Shareholders, On behalf of the Board of Directors, it is my pleasure to present the 2023 Annual Report for Pinnacle Minerals Limited (‘Company’). Pinnacle (ASX:PIM) is an ASX listed technology minerals company focused on delivering shareholder value via the systematic exploration and development of its portfolio of kaolin, rare earth and battery metals prospective projects in Western Australia and South Australia. The main focus for our exploration is the Bobalong and Holly Kaolin Projects in the Great Southern region of Western Australia. Pinnacle has progressed the Bobalong Project and completed a drilling program and a follow-up drilling program over the Tambellup East Prospect, named the “Disruptor Prospect”, where assay results have returned elevated TREOs, highlighting the potential for clay hosted REE mineralisation. The Company has also focused on progressing land access negotiations with several farmers over the Holly Kaolin Project, where the Holly Exploration Target of 140Mt – 350Mt of Kaolin resides. The Company has made significant acquisitions during the year, with the addition of the Capel Mineral Sands Project, the Tammin Project, and the Latham PGE-Base Metals Prospect in Western Australia. Pending successful land access negotiations, Pinnacle plans to conduct a two-phase exploration program over the Capel Mineral Sands Project, with previous desktop studies highlighting the potential for both Heavy Mineral Sands (HMS) and Silica Sand Mineralisation. A preliminary soil geochemistry soil survey was conducted at the Tammin project with results received post reporting date highlighting the potential for a clay hosted mineralisation. No physical exploration was conducted over the Latham PGE-Base Metals Prospect, however, Desktop reviews have revealed target areas across all of the WA projects. The Company’s South Australian Projects include the White Knight Project and the Camel Lake Project. The Company began an extensive historical exploration and a geological research assessment over the White Knight Project. The potential for multiple commodities within EL6791, including kaolin, graphite, base metals, REEs, and gold, in a relatively under-explored area were identified. No work could be completed on the Camel Lake Project as the tenement application is still pending. I would like to take this opportunity, on behalf of the Board, to thank all our Shareholders for their ongoing support. I would also like to thank management and my fellow Directors for their ongoing efforts. We are committed to progressing the Company by exploring and testing high-quality targets that can lead to significant discoveries on our extensive holdings in Western Australian and South Australia to grow the Company for the benefit of all Pinnacle shareholders. William Witham NON-EXECUTIVE CHAIRMAN Pinnacle Minerals Limited Page | 3 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 REVIEW OF OPERATIONS - OVERVIEW Pinnacle Minerals Ltd (ASX:PIM) is an ASX listed technology minerals company focused on delivering shareholder value via the systematic exploration and development of its portfolio of kaolin, REE and battery metals prospective projects in Western Australia and South Australia. The Company is focused on delineating resources at its advanced Bobalong and Holly Kaolin Projects in the Great Southern region of Western Australia whilst simultaneously expanding its’ project portfolio through targeting acquisition of prospective tenure both within Australia and Internationally. The White Knight and Camel Lake Projects are strategically located adjacent to Andromeda Metals’ (ASX:ADN) high-grade kaolin-halloysite discoveries in South Australia. The Tammin Project is adjacent to Anglo Americans’ (LON:AAL) Southwest Yilgarn Exploration Project and has both kaolin and clay hosted rare earth element exploration potential. September 2022 Quarter: In the September quarter, Pinnacle Minerals received results from the Wuhan University of Technology showing that the high-quality kaolin from Bobalong meets the requirements of major kaolin processors and potential offtake partners in China. Samples from the first round of drilling at the Bobalong Kaolin Project were sent to Intertek Genalysis for analysis with results being used to generate the Maiden Resource Estimate. On the corporate front, the September quarter saw the Company appoint Maurice (Nic) Matich as Chief Executive Officer on 19 September 2022. September also saw the Company finalise the issue of Loyalty Options for Eligible and Participating shareholders. A total of 20,697,634 Loyalty Options were issued for a total of $90,938. Pinnacle expanded its ground holding on 1 July 2022 with the granting of tenement E70/6094 December 2022 Quarter In the December quarter, Pinnacle Minerals announced the commencement (refer to ASX Announcement dated 14 October 2022) and completion (refer to ASX Announcement dated 14 November 2022) of an aeromagnetic and radiometric survey over the entirety of its’ Great Southern tenure (Holly and Bobalong projects). The survey consisted of 5,572 line-kilometres of gradiometer magnetics and radiometric surveys at a 100m line spacing. The Company also applied for three new project areas (4 tenement applications), detailed below: • • • • On 24 October 2022, the Company announced the application for mining tenement E70/6318, 274km2 of prospective tenure in the newly recognised West Yilgarn Cu-PGE province between Coorow and Latham. Refer to ASX Announcement dated 24 October 2022 “Yilgarn Cu-PGE Province Tenure Under Application”. (Figure 2) On 26 October 2022, the Company announced that it had applied for the Tammin Kaolin Project (E70/6319) located 215km from Perth WA. Refer to ASX Announcement dated 26 October 2022 “Tammin Kaolin Project Under Application”. Historical exploration with-in the tenement previously identified over 2km of kaolinite with an ISO brightness greater than 80. (Figure 1) On 24 November 2022, the Company announced it had applied for 105km2 of additional tenure adjacent to Pinnacle’s existing Tammin Kaolin Project, bringing the total tenement package to 339km2 of prospective exploration ground. Refer to ASX Announcement dated 24 November 2022 “Additional Tenure Under Application at Tammin Project”. (Figure 1) On 8 December 2022, the Company applied for Tenement E70/6372, which was previously held by Cable Sands (W.A.) Pty Ltd, a subsidiary of Tronox (NYSE TROX) and is prospective for heavy mineral sands (HMS). During the December quarter an external consultant with significant expertise in Heavy Mineral Sounds (HMS) exploration was engages to conduct a desktop study of the Camel Lake Project to generate exploration targets Page | 4 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 for HMS and Halloysite mineralisation. The report highlighted two large unexplored areas with HMS potential and four halloysite target areas. Pinnacle also engaged boutique consultancies Fremantle Metallurgy and Real Material Solutions to undertake and manage kaolin upgrade bench scale test work to produce “green” metakaolin from the Bobalong Project kaolinite ore, with the quartz component of the material also being tests for suitability as a high purity quarts (HPQ) feedstock. Pinnacle identified halloysite from surface samples taken at the Tammin Project (ASX announcement 6th of December 2022). The Company believes that the presence of halloysite from surface indicates the potential for a halloysite dominant mineralised zone in the vicinity of the sample location, with follow up exploration post granting of tenure and securing surface rights to endeavour to target such mineralisation. Figure 1: Location of Tammin Project Relative to the Port of Fremantle On the corporate front, the December quarter saw Maurice (Nic) Matich, previously CEO, move into the role of Managing Director, while Robert Hodby, previously Executive Director, retired from the Board. Page | 5 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 Figure 2: Latham project location relative to Chalice Tenements Page | 6 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 March 2023 Quarter The March 2023 quarter was a busy period for the Company with on-ground exploration accelerating across the Company’s project portfolio. The work undertaken in the quarter is summarised below: Western Australian Projects • Tambellup East / ”Disruptor Prospect” – The Company finalised the Tambellup East drilling program (Figure 3) in late March having completed 53 holes for a total of 1,144m. The program was conducted across a large 1.8km2 area that has several bright white “kaolin” dams. In addition to targeting shallow kaolinite mineralisation, several elevated nickel geochemical results previously identified by Falcon Minerals in 2008 were drill tested. The program successfully intercepted thick intervals of kaolinite material and sampled basement material on all holes to allow for a greater understanding of the local geology. Figure 3: Pinnacle exploration collars • • • Bobalong Project – Bills Middle – The Company finalised a review of preliminary data from the Bills Middle Resource mode, assay data and feedback from industry. The outcome of the review coupled with current market conditions culminated in Pinnacle halting further expenditure on the prospect. While the Kaolin market remains attractive for investment, the potential size and structure of mineralisation at Bills Middle was not considered amendable to a long-term mining operation which the company requires to secure multi-year offtake agreements to underpin development of the project. Holly Project – no, on-ground exploration was undertaken. Land access negotiations progressed with several farmers with properties overlying the Holly Exploration Target of 140Mt – 350Mt of Kaolin. Capel Mineral Sands Project – A desktop study by IHC Mining was completed during the quarter, which highlighted the potential for both Heavy Mineral Sands (HMS) and Silica Sand Mineralisation. A key outcome of the study was the potential for Iluka Resources’ (ASX:ILU) Capel South Mineral Resource to extend onto Pinnacle’s project area (Figure 4) . Pinnacle plans to conduct a two-phase exploration program pending successful land access negotiations, which is expected to include a shallow hand Page | 7 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 • • auger program to test the Silica Sand potential and a “deeper” reverse circulation air core program to test previously identified (by Iluka Resources Limited in 2010) Heavy Mineral (HM) mineralisation. Tammin Project – There were no physical exploration activities over the Tammin Project during the quarter. A desktop review of geological and geophysical data was conducted with several magnetic targets identified for follow-up by ultrafine soil analysis. Latham PGE-Base Metals Prospect – the March quarter saw the granting of the prospective, 274km2 Latham Prospect, in the West Yilgarn Cu-PGE Province. There were no physical exploration activities undertaken during the quarter, however, a desktop review of geological and geophysical data was conducted with several kaolin and gypsum targets identified. Potential extension of Capel South Mineral Resource Figure 4: “Capel” Project Map highlighting Iluka South Capel HM Mineral Deposit and Silica Sand Potential. Page | 8 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 South Australian Projects • • White Knight Project – during the quarter the Company conducted extensive historical exploration and a geological research assessment commenced. Preliminary results have highlighted the exploration potential for multiple commodities within EL6791 including, in addition to kaolin; graphite, base metals, REEs, and gold in a relatively under-explored area. The review identified the most prospective geological stratigraphy and structural settings to investigate further. Land Access agreements with landowners over identified target areas began with a view to following up identified targets with scout drilling programs. Camel Lake Project – The tenement application is still pending and as such, no, on-ground exploration was undertaken during the March quarter. Figure 5: South Australian Project Locations Page | 9 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 June 2023 Quarter In the June quarter, the Company announced that rock chips returning elevated rare earth oxides were intercepted in the bottom of hole TAM008 / TB050 during the initial Tambellup East drilling campaign. Four rock chips from the bottom of Hole TAM008, sent for multi-element assay, returned a maximum value of 626ppm TREO. Refer to ASX Announcement dated 19 April 2023 “Elevated rare earth oxides returned from downhole rock chips”. In addition to the elevated rare earth elements in the bottom of hole samples, three holes were selected for meter-by-meter assay for clay hosted REE’s. Several high-grade assays were returned including an intercept of 8m at 1104ppm TREO including 3m at 1,575 TREO (TAM007). Refer to ASX Announcement dated 24 May 2023 “Disruptor Prospect Drilling Update and REE Assay Results”. These assay results highlight the potential for clay hosted mineralization. On 2 May 2023, the Company announced that drilling was scheduled over the Disruptor Project in May, with the Company returning to the Project with a multipurpose rig capable of both air-core (AC) and slimline reverse circulation (RC) drilling. The drill rig had the ability to attach a 3m diamond tail to take bottom of hole core. Refer to ASX Announcement dated 2 May 2023 “Disruptor Prospect drilling targeting REE’s schedules in May. The Company announced the commencement of the 15-hole drilling follow-up program at the Disruptor Prospect (refer to ASX Announcement dated 16 May 2023 “Disruptor Prospect drilling targeting REEs underway”). On 24 May 2023, the Company announced the completion of the follow up drilling campaign at the Disruptor Prospect, with a total of 16 holes drilled for 746m, and with visual observations reinforcing and expanding on the drilling results from the original campaign completed in March 2023. Figure 6: Disruptor Prospect highlighting regional magnetics, faults, and proposed drill collars. Page | 10 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 COMPETENT PERSON STATEMENT The information in this report that relates to Exploration Results is based on, and fairly represents, information and supporting documentation prepared by Mr William Witham, Non-Executive Chair of Pinnacle Minerals Limited. Mr Witham has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which has been undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Witham consents to the inclusion in this release of the matters based on the information in the form and context in which they appear. Mr Witham is a shareholder of Pinnacle Minerals Limited. TENEMENT SCHEDULE As at the date of reporting, the Company holds a 100% beneficial interest in all tenements and tenement application through both the parent company and its’ subsidiaries. Project Holder State Tenement Status Percentage Held Bobalong Witby Clays Pty Ltd WA E70/5347 Granted 100% Bobalong Witby Clays Pty Ltd WA E70/5348 Granted 100% Bobalong Witby Clays Pty Ltd WA E70/6094 Granted 100% Bobalong* Pinnacle Minerals Ltd WA E70/6440 Pending Grant 100% Bobalong* Pinnacle Minerals Ltd WA E70/6441 Pending Grant 100% Holly Bullseye Geology Pty Ltd WA E70/5676 Granted 100% Holly Bullseye Geology Pty Ltd WA E70/5690 Granted 100% Tammin Pinnacle Minerals Ltd WA E70/6319 Granted 100% Tammin Pinnacle Minerals Ltd WA E70/6342 Granted 100% Latham Pinnacle Minerals Ltd WA E70/6318 Granted 100% Capel Pinnacle Minerals Ltd WA E70/6372 Granted 100% Camel Lake Eureka Metals Pty Ltd SA ELA2020-00230 Pending Grant 100% White Knight Open Minerals Pty Ltd SA EL6789 Granted 100% White Knight Pegasus Prospecting Pty Ltd SA EL6790 Granted 100% White Knight Titan Exploration Pty Ltd SA EL6791 Granted 100% White Knight Pegasus Prospecting Pty LTd SA ELA2023/0022 Pending Grant 100% Wirrulla* REE Exploration Pty Ltd SA ELA2023-00031 Pending Grant 100% Note EL – granted Exploration License ELA – Exploration license in application * Applied for post reporting date Page | 11 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 DIRECTORS’ REPORT Your Directors present their report together with the financial statements of the Group, being the Company and its controlled entities, for year ended 30 June 2023. 1. DIRECTORS AND COMPANY SECRETARY The names, qualifications, experience and special responsibilities of the Directors in office at any time during or since year-end are as follows: ● Mr. William Witham Chairman (Non-Executive Chairman) (Non-independent) (appointed 3 November 2021) BSc in Geology (Hons) Mr Bill Witham has held senior executive roles in the resources industry across the Australian and African resources sector for over two decades and has worked and lived in Australia, Africa and South America. Mr Witham has been involved in a number ASX listed companies has further experience in member-based organisation leadership, including currently with the Australia-Africa Minerals & Energy Group (AAMEG - CEO), and previously with the Chamber of Minerals & Energy WA (Government Relations and Policy) and the National Party WA (Corporate Director). Mr Witham is also a non-executive director of DMC Mining Limited. Interest in Shares and Options: 2,467,497 Shares and 1,600,000 Options ● Mr Maurice (Nic) Matich Managing Director (Non-Independent) (appointed 20 October 2022) BSc, Grad. Dip. Finance, BEng (Mechanical Engineering), GAICD Mechanical engineer and finance professional with over 15 years experience in the resources sector. His wide industry experience includes the provision of engineering, risk consulting and insurance services to numerous tier 1 mining companies with operations in mineral sands, kaolin, iron ore, gold and zinc. Nic has a deep understanding of the industrial minerals thematic having covered the sector as an analyst for Patersons Securities and more recently as Executive Director of Heavy Minerals Limited that Nic lead to listing on the ASX in 2021. Nic was the key driver of the company, delivering both a maiden resource and scoping study in his first twelve months as Executive Director there. Interest in Shares and Options: 150,000 Shares and 3,000,000 Performance Options ● Mr Stephen Ross Non-executive Director (Independent) (appointed 3 November 2021) BSc (Geology), FFin , MAusIMM, MAICD Stephen Ross is a geologist, independent consultant and public company director that has been involved in the international minerals industry in technical, business development and corporate positions. Stephen has sourced significant investments for junior explorers and pre-development resource companies worldwide while holding managing director and technical positions when based in Central Asia, West Africa and Sri Lanka. He is a member of the Australasian Institute of Mining and Metallurgy, is a Fellow of the Financial Services Institute of Australasia and a is a member of the Australian Institute of Company Directors. Stephen is currently the chairman of ASX-listed Power Minerals Limited, and a non-executive director of Summit Minerals Limited and Trigg Minerals Limited. Interest in Shares and Options: Nil Shares and 1,000,000 Options ● Mr Lincoln Liu Non-executive Director (Independent) (appointed 3 December 2021) BBusCom, MCom, MBA Lincoln Liu has worked in Australian equities including stockbroking, research and investment banking for over a decade. Mr Liu has experience in IPO's, Placements, Private Equity and M&A. His industry expertise includes resources and he has worked extensively with early stage companies. Mr Liu is a co-founder of a Sydney based Corporate advisory firm. He holds a Bachelor of Business and Commerce (Applied Finance) from UWS, Master of Commerce in Finance from UNSW & and a Master of Business Administration from USYD. Interest in Shares and Options: 50,000 Shares and 750,000 Options Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. COMPANY SECRETARY • Mr Jay Stephenson. MBA, FCPA, CA, CPA (Canada) CMA (Canada), FCIS, FGIA, MAICD Mr Stephenson has been involved in business development for over 30 years, including approximately 24 years as Director, Chief Executive Officer, and Company Secretary of various listed and unlisted entities in resources, manufacturing, wine, hotels and property. He has been involved in business acquisitions, mergers, initial public offerings, capital raisings, and business restructuring, as well as managing all areas of finance for companies. Page | 12 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 DIRECTORS’ REPORT 2. DIRECTORS’ MEETINGS The number of directors’ meetings attended by each of the Directors of the Company who hold or held office during the financial year was: DIRECTORS' MEETINGS AUDIT COMMITTEE Number eligible Number to Number eligible to attend Attended attend W. Witham 6 6 R. Hodby 2 2 M. Matich 4 4 S. Ross 6 5 L. Liu 6 6 3. DIRECTORS’ INTERESTS Number Attended NOMINATION COMMITTEE Number eligible to attend REMUNERATION COMMITTEE Number Attended Number eligible to attend FINANCE AND OPERATIONS COMMITTEE Number Attended Number eligible to attend Number Attended At the date of this report, the Remuneration, Audit, Nomination, and Finance and Operations Committees comprise the full Board of Directors. The Directors believe the Company is not currently of a size nor are its affairs of such complexity as to warrant the establishment of these separate committees. Accordingly, all matters capable of delegation to such committees are considered by the full Board of Directors. The relevant interests of Directors in the shares and options of the Company up to the date of this report were as follows: 2023 Shares No. W. Witham 2,465,4973 1,600,000 M. Matich 150,0004 3,000,000 S. Ross L. Liu 50,0005 1,000,000 750,000 2,665,497 6,350,000 1. 2. 3. 4. 5. 4. Options1,2 No. The Options were received as part of the Directors’ remuneration exercisable on or before the date which is 3 years from the date of quotation, 23 March 2025, and exercisable at $0.25. Included in the options are those acquired as Loyalty Options at $0.0005 per option exercisable at $0.25 on or before 20 July 2026. The Shares are held indirectly through William John Andrew Witham, Katherine Darian Witham Jensen ATF Acorn Family Trust. These Shares represent Consideration Shares issued pursuant to the Witby Clays Acquisition Agreement, a summary of which can be found in the Company’s IPO Prospectus. These shares are held indirectly through the Matich Empire Superannuation Fund of which Maurice Matich is a beneficiary. These shares are held directly by Lincoln Liu. PRINCIPAL ACTIVITIES The principal activity of the Consolidated Entity during the course of the financial year was to explore its current portfolio of projects and to investigate new opportunities for mineral exploration. 5. OPERATING RESULTS For the 2023 financial year the Group delivered a loss after providing for income tax of $951,716. 6. REVIEW OF OPERATIONS Refer to the Review of Operations – Overview located on page 4 of this report. 7. DIVIDENDS The Directors have not paid an interim dividend nor do they recommend the payment of a final dividend. Page | 13 PINNACLE MINERALS LIMITED and Controlled Entities ACN 655 033 677 ANNUAL REPORT 30 JUNE 2023 8. FINANCIAL POSITION As at 30 June 2023, the Group's cash and cash equivalents was $2,411,995, working capital was $2,389,297 and net assets were $5,481,198. The consolidated entity’s financial position has enabled the Group to limit its borrowings to internal parties and not to external financial institutions. This maintains a satisfactory working capital ratio. The directors believe the Group is in a satisfactorily stable financial position to continue its current operations. 9. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group during the year ended 30 June 2023. 10. EVENTS SUBSEQUENT TO REPORTING DATE There were no significant events after the end of the reporting year. 11. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Likely future developments in the operations of the Consolidated Entity are referred to in the review of operations - overview on page 4 of the Annual Report. 12. DIRECTORS’ SHAREHOLDINGS, CONTRACTS AND BENEFITS Since the end of the previous financial year no Director of the Company has received, or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors shown in the accounts) by reason of a contract made by the Company with the Director or with a firm of which the Director is a member, or a Company in which the Director has a substantial financial interest, other than as disclosed in the remuneration report below. 13. REMUNERATION REPORT (AUDITED) The remuneration report is set out under the following main headings: (a) Principles used to determine the nature and amount of remuneration (b) Details of remuneration (c) Service agreements (d) Equity instruments disclosure relating to Key Management Personnel (e) Share-based compensation (f) Loans to / from Key Management Personnel (g) Transactions with Related Parties of Key Management Personnel The information provided in this remuneration report has been audited as required by s308(3C) of the Corporations Act 2001 (Cth). (a) Principles used to determine the nature and amount of remuneration The following report determines the principles used to determine the nature and amount of remuneration. The Board is responsible for determining and reviewing compensation arrangements for the Directors and the Executive team. The role also includes responsibility for share option schemes, superannuation entitlements, retirement and termination entitlements, fringe benefit policies, liability insurance policies and other terms of employment. The Board will review the arrangements having regard to performance, relevant comparative information and at its discretion may obtain independent expert advice on the appropriateness of remuneration packages. Remuneration packages are set at levels intended to attract and retain Executives capable of managing the Company’s activities. The practices of negotiation and annual review of Executive Directors’ performance and remuneration are carried out by the Non-Executive Directors of the Board. The Chairman of the Board who makes recommen